First published 2020 in Great Britain and the United States by ISTE Ltd and John Wiley & Sons, Inc.
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ISBN 978-1-78630-332-5
vi Sustainable Production System
Chapter 4. Accounting:
4.1.
4.1.1.
4.1.2.
4.2.
4.2.1.
4.2.2.
4.3.
Chapter 5. Contractualizing:
5.1.
5.1.2.
5.2.
5.2.1.
5.2.2.
5.3.
Chapter 6.
6.1.
6.1.1.
6.2.1.
6.2.2.
Introduction
Since 2012, with the United Nations Conference on Sustainable Development “RIO +20”, more strongly than before, the capitalist enterprise is invited to contribute to the achievement of the community’s ecological ambitions. In France, the Direction générale du Trésor (Directorate General of the Treasury) and the Commissariat général au développement durable (General Commission for Sustainable Development) declare in a joint report that the States alone have neither the vocation nor the capacity to assume the financing of the ecological transition (Dron 2013). Regulations, soft law, tax instruments and public financing must accompany the responsible company toward more environmentally sound practices. This role entrusted to the capitalist enterprise is that of a private social institution contributing, beyond the private purposes to which it devotes itself, to serving the general interest (Touraine 2003).
In June 2016, the Agence française de l’environnement et de la maîtrise de l’énergie (French Environment and Energy Control Agency) mentioned the positive effects of a scenario of switching to a “100% renewable” electricity mix (ADEME 2016). By 2050, this technological transition could, according to this report, create 800–900,000 jobs and generate a GDP increase of 3.8–3.9%. Such a scenario involved an investment of 31 billion euros per year, an increase of 7% compared to the investments already planned. The State would have had to bear only 4–5 billion per year, the rest could be provided by private actors. The role of the State would then mainly consist of organizing the consistency between the deployment of public and private investments.
In order to facilitate the organization of this investment flow management, the Dron’s (2013) report proposes extending to public and private institutional investors the social environmental responsibility (SER) framework imposed on certain companies since the New Economic Regulations (NER) Act of 2001. It suggests that the development of socially responsible investment (SRI) should be encouraged so that public and private investments can converge, within a common logic of social responsibility (SR). The purpose of this proposal is to base non-financial evaluation and reporting on understandable criteria of social and environmental utility, and thus to promote the selection of projects eligible for financing
While some aspects of this policy are theoretically appropriate – no one would criticize a desire for consistency in investment approaches – it is not suitably equipped in practice.
Only listed companies are covered by the NER law. And it is on a voluntary basis that these companies determine the SR objectives, and the non-financial reporting procedures by which they fulfill their generic reporting obligations to the community and key players in their market. The exercise of the company’s general interest mission is therefore very free.
On the other hand, while it is true that extending the scope of the SR framework to public and private institutional investors may lead the company to appropriate some of the SR criteria used by these investors (and thus to simplify the analysis of eligibility for financing and its effectiveness), a “mirror” challenge is to prevent this public/private SR commensurability from leading to an alignment of public objectives with those of the company.
Sustainable development policies must integrate market requirements and not seek to be eligible for them, to comply with them. Considering the economic conditions for sustainable development implies a syncretic approach to globalized finance and the very local socioeconomy of territories. It is, therefore necessary to address the point of friction between these two rationalities, which are complementary but whose contemporary expression is carried out in an extremely frontal way, as proven by the French political and economic situation highlighted by the “yellow jackets” crisis that broke out in 2018.
Investment in sustainable development strategies is most often considered from a technico-economic perspective. The focus is on the relationship between investments in “eco-efficient” technology, social conditions of work
and resource supplies, production costs, selling prices of products and the solvency of the actors.
A more socioeconomic approach will integrate this relationship between investment and technological production into a broader field of concern.
The socioeconomic approach will emphasize the importance of a collective capacity to represent the social, economic, and environmental benefits conferred by the choice of one means of production over another, and the sociopolitical propensity to organize the financial conditions favorable to the selection of this means, and therefore of these benefits. In a socioeconomic approach, the evaluation of returns on investments remains essential, but it is inseparable from the consideration of other issues –replacing the financial dimension in a broader field of representations and then recognizing its influence as less exclusive.
Economic actors are subject to solvency constraints specific to their business and situation, while being motivated, on the whole, by a common ambition of the sustainability of the territory whose development they contribute to. These actors take into account the two approaches, socioeconomic and technico-economic, to varying degrees, with each party’s constraints and customs sometimes predisposing them to one rather than the other.
The central issue addressed in this book is the balance of powers of economic representation. Ensuring this balance means, for example, ensuring that the distribution of investment between cleaner production technologies (technico-economic approach) and changes in the relationship to consumption (socioeconomic approach) corresponds to a truly constructed strategy, and not to a conditional, ideological reflex.
A thorough reflection on how to account for value is then needed. The current trend toward consistency between the various international extrafinancial frameworks, whether generic or sectoral, applicable to companies is accompanied, at the EU level, by their approximation of private accounting. This approximation is presented as a way to institutionalize a new way of observing and investing. The national accounts and public statistics systems are also under revision. In particular, they will incorporate the guidelines of a framework of post-2015 sustainable development goals (SDG) defined by the UN.
In many respects, this coevolution between national accounts, statistics and SDG is favorable to the evaluation of public and private coordination. The reading grid constituted by these goals allows an analysis that is at the same time global, adapted to biosphere issues, and locally differentiated according to the plural modes of representation of what can be the success of a sustainable development policy. Private actors will be able to have an integrated vision of their SER action and profitability. The State could make the SDGs coincide with the new indicators of wealth defined in 2015 by the Eva Sas1 law (in an almost total media silence) and put these goals and indicators in relation to the creation of added value. This would make it easier to understand the decoupling between GDP growth, and environmental and social groups degradation.
These new indicators of wealth, inspired by the Commission sur la mesure des performances économiques et du progrès social (Commission on measurement of economic performance and social progress) (Stiglitz et al 2009), then proposed by the Comité Economique Social et Environnemental (Economic, Social and Environmental Commitee – CESE) and France Stratégie (French socio-economic think task), describe the research effort, employment rate, debt, disability-free life expectancy, income inequality, poverty, life satisfaction, school dropout, soil artificialization and carbon footprint. They are again mobilized by the Philippe government at the end of February 2019 (still in media silence) to give a new orientation to the political evaluation2. They offer the analyst the possibility of a polychromatic reading of progress, complementary to that of GDP and debt, monochromatic, “in black and white”. It may also be surprising that they have not been mobilized to structure paths of contribution to the Great National Debate, or its restitution.
But let us return to the heart of the matter: the economic modalities of collective survival in what is now known as the Anthropocene
1 Law No. 2015-411 of April 13, 2015 published in the Official Gazette No. 0087 of 14 April 2015, the sole article of which states that “the Government shall submit annually to Parliament, on the first Tuesday in October, a report presenting the evolution, over the past years, of new indicators of wealth, such as inequality indicators, quality of life and sustainability, as well as a qualitative or quantitative assessment of the impact of the main reforms undertaken in the previous and current year and those planned for the following year (...) in relation to these indicators and the development of gross domestic product.”
To reduce the environmental impacts of the economy, it is often considered, as we have mentioned, to finance the adoption of more sustainable production technologies: this is the technico-economic approach. In a strictly financial analysis, returns are then clearly identifiable, associated with the physical productive apparatus that is the property of an entity.
We have also introduced a socioeconomic approach. And it is also necessary to finance socioeconomic engineering schemes to support cooperation through which the actors of a territory can create, outside specific financing, by the effect of their self-organization, conditions favorable to the diffusion of technological innovations or any other mode of bifurcation toward a more sustainable society.
Technological change is indeed one of several paths – certainly the most compatible with investors’ current practices but not necessarily the most efficient.
Reversing the perspective in this way, by considering the opportunity to invest in territorial socioeconomic engineering to bring out productive choices, implies that we should no longer limit ourselves to representing profitability and sustainability separately, nor to orient institutional financing toward one or other of the territory’s activities. The aim is to represent and coordinate, from the territorial level, a set of activities whose interactions have positive effects both in terms of sustainability and solvency.
In other words, it is a question of giving rise to a real mesoeconomic analysis of territorial development.
The SER indicators would then be used as a basis for deliberations, during which the actors would express their judgments concerning the interactions between activities within the territorial system, discuss together ways of strengthening the effects deemed desirable, and study on this basis innovative options for access to financial capital. These indicators would also be used during contractualizations to determine the precise and personalized terms and conditions of the contributions (in cash, organization and work) granted by each of the territory’s actors, including the institutional investor.
These two approaches complement each other. They imply that the private sector, the community and investors can escape from market reaction behavior in order to adopt a position of expertise and anticipation. The technico-economic approach contributes to the maturation of local markets,
xii Sustainable Production System
i.e. their renewal from within due to a change in the representations of the value generated by the increased consideration of environmental performance. A spread of the socioeconomic approach would lead to the opening up of a new economic area of valorization, outside the market, i.e. political, through coordination at territorial level. This would, moreover, without this being its central ambition, be favorable to the structuring of local markets and to the propensity of actors to adopt technical and economic innovations.
Coupling these two approaches would thus create the opportunity for a virtuous circle for an acceleration of the transition to more sustainable development. But if the alignment of public and private investment – which, as we have mentioned, now constitutes the core of French sustainable development policy – is to accompany the coupling of these two approaches, it is desirable that they can be apprehended with the same finesse and with comparable ease.
SER practices are already relatively suitable for public or private institutional investment in direct support for more environmentally sustainable technologies. Extra-financial reporting, activity reporting and financial statements allow a company to communicate fairly easily how the technological resources it mobilizes are consistent with its SR ambition. The investor can then choose to support this company according to the consistency of this ambition with its own objectives. A fairly clear link can thus be established between the indicators used by the investor to calibrate its contribution, and the indicators used by the beneficiary organization to reflect the virtuous nature of its production practice.
On the other hand, current SR practices are not very appropriate to support the dynamics of the emergence and functioning of multi-actor social innovations. The link between the indicators mobilized by the investor to calibrate its contribution, the indicators mobilized during the deliberations carried out by a multi-actor territorial organization and the indicators mobilized individually by each of the actors is rather weak. The ability to guide, calibrate, monitor and evaluate investments in a group activity is therefore currently weaker than in the case of direct support for technological change.
We might be tempted to argue that this gap is due to a difference in the ability to assess returns on investment: during a technological investment,
there is most often an institutional overlap between ownership of the production apparatus and responsibility for achieving SR objectives. That would not be inaccurate, but a bit quick. Once documented in terms of SR objectives, budgeted and contracted, a cooperation is legally embodied on a territorial scale. Its support by the institutional investor is therefore carried out according to very traditional methods.
It is well in advance that the limit is located. While the current accounting and SER systems can help to channel institutional investment – public or private – into an already established territorial cooperation structure, they are currently of no use when it comes to supporting its emergence and organization.
An investor who would like to encourage the emergence and organization of a territorial cooperation structure can finance mechanisms aimed at improving communication between territorial actors. Innovative socioeconomic engineering would, for example, strengthen the participation of these actors in the deliberations and improve these deliberation practices. The investor would thus contribute to creating a local heritage of mutual understanding that could encourage concerted specialization and innovation, thus increasing the potential for economic, ecological and social sustainability.
However, it is difficult for an institutional investor to invest in a potential when no quantified, financialized and contractualized reading of the future of its investment is available. Is it a diffusion of the notion of accounting assets to all spheres of the economy, including the public sphere, i.e. a need for certainty in the identification of future benefits – a certainty that, in accounting, is closely linked to the legal concept of ownership?
In any case, a “too indirect” relationship between investors and multiactor mechanisms that is not able to account for industrial production hinders the financing of socioeconomic innovation. This innovation is not always carried out by entities that have the very particular institutional basis conferred by the ownership of the means of production, which is accompanied by the ability – or at least the legitimacy – to document the effects of this production. For this reason, the link between the indicators used by the institutional investor to calibrate its contribution, the indicators used by multi-actor organizations during territorial deliberations and the indicators used by the actors who contribute to them is now too weak.
xiv Sustainable Production System
The Dynamic Modeling of Cost Systems (DMCS) approach – the principles of which are set out in this book – is intended to help institutional investors, both public and private, but also local inhabitants, associations, politicians and other actors, to encourage the emergence of local coordination. Its ambition is to provide an analytical grid that each of them can use to collectively renew representations of what coherence in investment is.
This approach is based on a breakdown of the territorial economy, which can be represented by the interweaving of information processing cycles, each characterized by three positions: deliberation, contractualization and valuation. These three-position cycles are incorporated into other cycles (ecosystem, social, political, institutional, etc.) whose representation sometimes implies that the micro-, meso- and macroeconomic levels are no longer separated.
In this “space” of representation, the relationships between economic costs used as arguments in political deliberations, prices of market or territorial contracts and values recorded in private and public accounts are changing. These representations are nourished by communication between actors. They are evolutionary and dynamic. And because of this dynamism, a clear formalism must make it possible to avoid any confusion between the plural times of investment: its past (the origin of the methods and tools that motivate it), its future (what is expected of it) and its present (the way it is implemented).
These conditions are first and foremost presented in this book as necessary for scientific rigor. However, since their formulation is intrinsically a proposal to clarify the rules and strengthen the readability of the relationship to what triggers the decision to invest, these conditions are also a way to avoid opposing wills and cultures head-on, thus freeing the ecological and social transition from certain inertia.
Chapter 1 focuses on representations of sustainable development and their influence on the choice of economic valuation tools. In particular, it describes how the currents of the ecological economy and the social economy both imply a systemic understanding of the economic concept of capital. The thesis developed in this chapter is that any attempt to analyze the relationships between wealth, the ecological and social impacts of production is intrinsically biased by distortions at the heart of the valuation process proposed by the neoclassical economic theory.
Chapter 2 suggests reducing the distortion of economic representations attached to neoclassical analysis by addressing ecological and social functions in an intrinsic way, directly at the territorial level. In particular, it is highlighted in this chapter that the methodology of collective understanding of these territorial functions is not only useful on an ad hoc basis and limited to the issues at stake in a particular governance situation. The memory of a coordination process remains within the social group. It helps to shape its identity, transforms views of economic performance and nurtures a territorial capacity to build on past experiences.
Chapter 3 proposes socioeconomic engineering tools whose mobilization is favorable to an increase in the capacity of actors to co-produce, implement and enhance a territorial development scenario. Deliberative practices, in physical meetings and with the support of digital tools, make it possible to qualify, through ad hoc and evolving indicators, the conditions for returning to a situation of sustainable functioning of ecological, technical and social systems. Such practices minimize some of the spatial, temporal and dimensional distortions inherent in neoclassical assessments. They improve the quality of economic information.
Chapter 4 is dedicated to accounting, in its broadest sense, that is, to everything that makes it possible to account for an activity and its effects. This includes its interactions with other activities, and the ecological, social and economic results of these interactions. This involves, first of all, strengthening the quality of the link between economic information resulting from the local deliberative life of a territory, and financial information subject to less localized fields of constraints (an example concerning the “green value” of buildings will be presented). Accounting innovations must lead, on the one hand, to no longer substitute the various capital assets (ecological, human and financial, in particular) considered by the sustainable development economy for each other, and, on the other hand, to jointly redesign profit formation and the measurement of national wealth.
Chapter 5 involves contractual practice – in both socio-political and market approaches – of what a contract can be. Negotiation prior to contractualization may lead to the inclusion in the contract clauses of performance objectives relating to the sustainability of the development of the territory. Consequently, placing contractualization in new dimensions, temporalities and scales of analysis – which is encouraged by territorial deliberation – can renew the interpretation of monetary information
associated with the costs of contract performance and change the willingness to invest (an example concerning the recycling of construction materials will be presented). More generally, the monetary amount associated with the execution of a contract is only informative in the light of the limited and detailed view that is taken, at the time of the transaction, of the territorial effects of this execution.
Chapter 6, by describing the dynamic modeling of cost systems approach, proposes a new way of considering the relationships between micro- and macroeconomic analyses. The representations used during multi-actor contract on territorial issues, and those used to structure accounting representations of value, are in co-evolution. In other words, the coordination of a multitude of activities considered at the microlevel, whose social, ecological and economic effects can be taken into account (the example of the fourth chapter), can motivate mesoeconomic restructuring, whose social, ecological and economic determinants can be contracted (the example of Chapter 5). Making this phenomenon of micro–meso emergence visible implies accepting the relativity of cost perception according to the modes and levels of construction and interpretation of economic information. Socioeconomic innovations (multi-criteria multi-actor analysis) must therefore be brought into dialogue with traditional practices (aggregation of added values, in particular). Moreover, since investing in socioeconomic engineering promotes sustainable and economically advantageous territorial coordination, these investments should be considered as productive investments. Such openness in terms of political economy allows a new approach to the governance of the commons. However, this last chapter insists on the fact that no theoretical politico-economic model can ever guarantee a development compatible with a bioclimatic reality that is sustainable for human societies.
I would like to thank Paulina for her patience, the International Centre for Research in Ecological Economics, Eco-Innovation and Tool Development for Sustainability (REEDS), Sylvie Faucheux and Kleber PintoSilva – editor and co-editor of my thesis – the Research Network on Innovation (RNI), the Institut de Recherche et d’innovation du Centre Pompidou (IRI), ePLANETe.Blue, the Centre lillois d'études et de recherches sociologiques et économiques (Clersé), as well as the ISTE Group.
1
Economics and Imbalances
1.1. Capturing power
The founding definition by Brundtland et al. (1987) – “Development that meets the needs of the present without compromising the ability of future generations to meet their own needs” – emphasizes the idea of a capacity, which is embedded and renewed over time. One of the fundamental questions raised by the concept of sustainable development is the place of the economy in the renewal of this capacity over time.
On its website, INSEE, the French national statistics office, offers another definition of sustainable development, which emerged from the Earth Summit in Rio in 1992: “Economically efficient, socially fair and ecologically sustainable development.” What meaning should be given to this definition? Is sustainable development an adaptation to the margin of economic development? Is it a question of adding social equity and ecological sustainability to the list of criteria that, in the history of thought, came to qualify economic development1? Or is it a question of rethinking development itself?
An animal species develops; we speak of vegetative development for plants; a city can also be considered as being in development, or – in a
1 Flipo (2015) distinguishes criteria relating to the specialization of activities (List 1841), forms of exchange (Hildebrand 1848), production (ownership) relationships (Marx 1876), the length of the path between producer and consumer (Schmoller 1884), the quantity of consumption per capita (Rostow 1957), GNP growth (Solow 1972), or the parity of the private rate and the social rate (North 1976).
2 Sustainable Production System
figurative sense – a social organization, such as a sect. But when the term development is used without a qualifier, it most often refers to economic development.
The epistemology relating to a sustainable development economy needs to be clarified. A possible beginning point is to look at the origins of this economic approach. Several elements that characterize the concept of sustainable development were already present at the heart of another concept –eco-development. Some still consider the latter as the most suitable reference for analyzing the sustainability of relations between social, ecological and economic aspects.
1.1.1. From eco-development to sustainable development
1.1.1.1. A change in reference frame
The idea of eco-development was proposed by Maurice Strong at the Stockholm Conference2 in 1972. For Ignacy Sachs, who later made the concept popular, this eco-development “implies a hierarchy of objectives: first the social issues, then the environment, and finally only the search for economic viability, without which nothing is possible. Growth must not become a primary goal, but must remain an instrument at the service of solidarity between present and future generations” (Sachs 2002, p. 7). Ecological integrity is thus considered necessary to achieve the goal of social well-being. And economic viability – an essential condition for development –remains a means and must be within the physical limits of the biosphere.
This anchorage of development within the physical limits of the world implies a temporal anchorage. The ecosystem – its viability and its time for renewal – would become the planner’s paradigm. Human activities would adapt, “the time horizon would be calculated in decades and even centuries” (Sachs 1988, p. 40).
This adaptation would not be to the detriment of the populations. Ecodevelopment involves a certain level of economic, environmental and social policy planning to ensure that human beings are given a central place.
2 United Nations Conference on Development and the Environment held from June 5 to 16 1972, 15 years before the Brundtland Report and the first formulation of the concept of sustainable development.
Figure 1.1. Systemic approach to eco-development (Sachs 1978, p. 22)
For Diemer (2013), thinking of eco-development means “starting by setting clear objectives for food, housing, access to care and education, linking them to social groups and ensuring that the necessary production is done in harmony with the environment”.
An acceptable level of social homogeneity
Fair distribution of income
Social
Economic
Full employment or job security providing an acceptable standard of living
Equitable access to natural resources
Balanced development of the different sectors of the economy
Food security
The ability to constantly modernize the production equipment
A sufficient degree of autonomy in scientific and technological research
Integration into the national market while respecting national sovereignty
Ecological Protection of the renewal capacities of natural assets
Control of the limits on the use of non-renewable resources
Cultural Change in continuity (balance between respect for traditions and innovation)
4 Sustainable Production System
The possibility of designing a national program independently: personal autonomy, endogeneity (rather than blind trust in foreign models), self-confidence combined with openness to the world
Balancing rural and urban development (reversing trends that favor the allocation of public funds to urban areas)
Improving urban landscapes
Territorial
Fight against regional disparities
Implementation of environmentally sound development strategies for environmentally sensitive areas
Table 1.1. The five criteria of eco-development (Sachs 1997, pp. 84–85; Berr 2013)
Let us return to the concept of sustainable development. Its most wellknown representation, the interface of the three “spheres” – or “pillars” –proposed in Rio in 1992, shows the relations between the economic, ecological and social spheres in a very specific way – almost orthogonal to what eco-development suggests. While the two approaches can be described as systemic, the interface proposed in Rio places the three fields at the same level of challenge and means, while eco-development ranks them into interrelated, interlocking levels, distinguishing demand (social), supply (economic) and environmental quality.
Figure 1.2. Interfaced representation of the three “pillar” domains of sustainable development
The criteria and objectives of eco-development are also reminiscent of the seventeen global sustainable development goals (SDG) that replaced the eight millennium development goals (MDG) adopted by UNDP in 20003.
Table 1.2. The seventeen sustainable development goals (UN 2015)
The proximity of these two sets of criteria, which are separated by 20 years, is striking. Some eco-development criteria are more assertive regarding the means to be implemented (balance in innovation and tradition, possibility of designing a national program independently, etc.). However, identifying what fundamentally distinguishes them from the SDGs is not easy if we simply look at these two sets of criteria statically. The history of the propagation of the two concepts to which they are associated facilitates the understanding of phenomena that led to the installation of one at the expense of the other.
3 This replacement took place on September 25, 2015, at a United Nations Summit held at United Nations Headquarters in New York from September 25 to 27 in the form of a High-level Plenary Meeting of the General Assembly to adopt the post-2015 development programme.
1.1.1.2.
Spaces for the propagation of concepts
In October 1974, a symposium of experts from UNEP4 and UNCTAD5 met in Cocoyoc, Mexico, following the work initiated in Stockholm two years earlier. It dealt with the organization of resource use, the environment and development, in an approach strongly influenced by the logic of ecodevelopment.
The Cocoyoc final declaration calls for combating underdevelopment by stopping the overdevelopment of the rich, encouraging developing countries to build on their own strengths in order to gain self-confidence and learn to no longer be dependent on rich countries. In response, United States Secretary of State Henry Kissinger urged6 UNEP to remain focused on the issue of clean-up (Sachs 2007, p. 264). The eco-development project will then gradually be replaced at the forefront of the world political scene by the concept of sustainable development.
For Stengers (1989, pp. 21–22) “The propagation, or attempted propagation, of concepts does not take place in an indifferent, homogeneous space, but in landscapes structured by issues well known to the actors of these operations (...). Some of the issues that activate propagation operations are circumstantial, linked for example to technical, industrial or social problems. Others are more closely linked to the interests of prestige and authority attached to the scientific approaches themselves. Among the latter, we can identify two (...) that we will call ‘intensification’ and ‘capture’.”
The political exclusion of the concept of eco-development – i.e. the interruption of its spread – has not taken place in a “space” of indifferent influences and representations. It was not mainly circumstantial issues that came into play – the proximity of the criteria and objectives of ecodevelopment and sustainable development testifies to this. If the circumstances had been radically different between the emergence of the first
4 United Nations Environment and Development Plan.
5 United Nations Conference on Trade and Development, a subsidiary body of the United Nations General Assembly.
6 “What is this statement from Cocoyoc? Another such story and we will have to review our attitude towards the United Nations Environment Programme, whose mission is to deal with pollution clean-up.” Henry Kissinger, Secretary of State of the United States of America. Remarks reported by Sachs (2007, p. 264).
and the advent of the second, how would such similar environmental, economic and social criteria have been used to describe these two concepts?
Intensification and capture issues, as defined by Stengers (1989), were decisive. According to Berr (2013), it was Kissinger’s intervention, combined with the advent of neoliberalism, that led to the marginalization of the ecodevelopment project. For Diemer (2013), “eco-development, socially inclusive and respectful of the environment, is hardly compatible with the economic context of the 1990s, marked by the return of liberal theses, of which the Washington consensus is an emanation”.
The concept of eco-development provides a precise methodological answer to the fundamental question mentioned above – is sustainable development a renewal of economic development or a development giving way to a new economy? Its capture by global economic governance limits the space of possibilities for the propagation of its “successor”: neoliberal influence strongly contributed to the marginalization of eco-development, how could it be foreign to the propagation of sustainable development?
It is precisely to the exploration of this problem that this book is dedicated. The influence of economic representations on representations of other levels of reality, as well as on actions that can be taken to make these realities more sustainable, is decisive.
Let us then take an interest in neoliberal theses and the economic representations they convey. The application of these theses is supported by the mathematical formalisms of neoclassical economics (Denison 1967), one of the cornerstones of which is the logic of global factor productivity (Stiglitz 1974; Dasgupta and Heal 1979).
The central idea of such “global productivity” is that the value of economic production can be described as the joint mobilization of capital (financial and manufacturing), human labor and raw materials. This “global productivity” is embodied in particular by Stiglitz’s model (1974), which describes by a Cobb-Douglas equation – Q = La Kb Eg – the relationship between production (Q), labor “factor” (L), capital “factor” (K) and environment “factor” (E). The “partial elasticities” α, β, γ of production with respect to these three factors indicate the respective share of each of these factors in the product.
This approach leads to the possibility of at least partial substitutability of factors of production. Following this reasoning leads to the conclusion that since there is elasticity7 within a production, the lower availability of one factor can, to a certain extent, be compensated by a more substantial mobilization of another factor.
From the point of view of industrial production in a neoliberal economy, money can indeed buy machines, as well as paid working time and raw materials from the environment. But can this logic of substitutability be extended beyond the strict point of view of the industrial production firm?
The interfaced representation of sustainable development does not preclude the use of the global productivity model of production factors. On the one hand, ecology and economy together allow sustainability; on the other hand, environment and capital together allow economic production. A confusion of the representation spaces can quickly occur! Yet precisely in the space of representation of the value of industrial production in a neoliberal economy, social systems exist only with regard to the human work they provide, while ecosystems are assimilated to an environment that is only a stock of raw materials.
In any case, neoclassical economists answer in the affirmative –substituting is possible – they disseminate in particular the theories of compensation and the internalization of externalities.
The theory of compensation (Hartwick 1977) assumes that it is possible to ensure the ecological sustainability of development by maintaining economic savings above the depreciation of “natural capital” and by reinvesting the savings in the reformation of this capital (in order to “repair” the environmental impacts of economic activities).
The theory of the internalization of externalities proposes that nuisances and pollution – negative external effects of the economy, or “negative externalities” – should be associated with a price that allows them to be taken into account and thus controlled. This would be taken into account either through State intervention, through taxation (license fees), in order to bridge the gap between the social cost (cost of pollution and nuisances for society) and the private cost (cost for companies of switching to a less polluting mode of production (Pigou 1920)), or, without direct State intervention, through
7 Variation in percentage of a quantity, following a 1% variation of another quantity.
negotiation with a view to market compensation between emitters and victims of pollution (Coase 1960).
During the Rio Declaration in 1992, the very one that saw the emergence of the three “pillars” associated with the concept of sustainable development and their interfaced representation, 27 principles were set out to clarify this concept and put it into action.
Among them, the principle of integration8 emphasizes that environmental protection must be an integral part of the development process. Another principle, the 13th one, specifies one of the modalities of this integration by providing details on legislation relating to pollution liability and compensation methods for local and international victims of such pollution. It paves the way for the operationalization of the polluter pays principle9 , already adopted by the OECD in the early 1970s, and which has its direct origin in the neoclassical theory of internalization of externalities.
The 11th principle of this declaration argues that the effectiveness of local legislative measures must allow for the adaptability of standards to production contexts that may vary from one State to another. This is certainly a measure of equity linked to the social and environmental costs of production. But it is also a question, which is explained by the following principle10, of maintaining free trade in a system likely to generate economic growth while combating environmental degradation.
8 PRINCIPLE 4: “In order to achieve sustainable development, environment protection shall constitute an integral part of the development process and cannot be considered in isolation from it.”
PLANET EARTH SUMMIT. United Nations Conference on Environment and Development. Rio de Janeiro, Brazil. June 3–14, 1992.
9 PRINCIPLE 16: “National authorities should endeavor to promote the internalization of environmental costs and the use of economic instruments, taking into account the approach that the polluter should, in principle, bear the cost of pollution, with due regard to the public interest and without distorting international trade and investment.”
PLANET EARTH SUMMIT. United Nations Conference on Environment and Development. Rio de Janeiro, Brazil. June 3–14, 1992.
10 PRINCIPLE 12: “States should co-operate to promote a supportive and open international economic system that would lead to economic growth and sustainable development in all countries, to better address the problems of environmental degradation. Trade policy measures for environmental purposes should not constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on international trade. Unilateral actions to deal with environmental challenges outside
